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When an asset that is not fully depreciated is discarded, and depreciation is recorded before removing...

When an asset that is not fully depreciated is discarded, and depreciation is recorded before removing the asset from the accounting records and discarding it, a.free cash flow increases. b.operating expenses decrease. c.liabilities decrease. d.asset turnover increases.

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Answer #1

Ans: asset turnover increases (option d)

When an asset that is not fully depreciated is discarded and depreciation is recorded before removing the asset from the records, it would lead to an increase asset turnover as there will be a decrease in average total assets. Hence, option d is the correct choice.

The disposal of asset in such situation would not increase free cash flows or decrease operating expenses and liabilities, all other options are incorrect.

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